SHOULD MARRIED COUPLES HAVE TWO SEPARATE REVOCABLE LIVING TRUSTS?
Terry Says: That depends on how they want to maintain their assets. First of all, note that I edited your question a bit. You asked about IRREVOCABLE trusts. But a “living trust” is truly a “revocable living trust” — which means you can change the directions inside it easily at any time. You will need a competent estate planning attorney in your state to draw up living trusts for you and your spouse.
So here’s what I meant about when I wrote that first sentence. Let’s suppose that you and your spouse are in a second marriage — and you want to keep assets from your first marriage separate and not combined. Then each of you could have a separate revocable living trust, keeping the title of your house, for example, in your own living trust, as well as all your pre-marriage assets such as savings, heirlooms, investments, etc separately owned by your own trust. The trust would carry instructions as to the distribution of those assets at your death. You could provide for your spouse to live in the house for a number of years, for example, or simply distribute all the assets of the trust to your children from your previous marriage. Your spouse could do the same thing.
However, if you own everything jointly, and will jointly decide on distributing all the assets (or some of them on the death of the first spouse), then you would have one joint living trust, with both of you as trustees. Depending on the state of residence and the size of the assets, you might want to simply have the surviving spouse take over the existing trust at death of one of the spouses. But the trust will have instructions for a successor trustee to distribute assets according to the terms of the trust if both die together, or the surviving spouse is incapacitated.
Lots of big words, huh!! Well, just remember one thing. The most important thing is to CHANGE TITLE to all your important assets into the name of your trust, or trusts, after they are created. It doesn’t cost much, doesn’t have tax implications — but you must legally change ownership on the title of your house, investment accounts,etc. The lawyer will help you do this.